Aluminum Prices Expected to Remain Elevated in 2024 Due to Tight Market Balance

Aluminum prices are anticipated to stay elevated throughout 2024 as a tightening market balance emerges, with global demand growth outpacing supply, according to BMI, a unit of Fitch Solutions Group. In a report released this week, BMI forecasts that aluminum demand will increase by 3.2% year-on-year in 2024, reaching 70.35 million tonnes, while supply growth will lag behind at 1.9%, reaching 70.6 million tonnes.

The growth in demand is expected to be driven by non-traditional sectors, particularly China’s clean energy industry. China, which is the largest consumer of aluminum globally, is projected to account for 63.5% of worldwide aluminum demand this year. On the supply side, BMI expressed a cautiously optimistic outlook due to solid production growth between January and August, as well as improved weather conditions in Yunnan province, a key aluminum-producing region in China. However, recent disruptions in the raw materials market pose a risk to aluminum output growth, especially within China.

Despite robust demand, the global primary aluminum market is expected to remain in surplus, although the surplus is anticipated to shrink significantly from 384,000 tonnes to just 96,000 tonnes by the end of 2024. This tightening market will also impact prices, with BMI anticipating a 6% increase in average aluminum price levels compared to 2023, which saw a decline of 15.6% from 2022 levels.

The renewed optimism in the aluminum market is attributed to two main factors: growing supply concerns in the raw materials sector and broader positive economic developments. BMI has also revised its 2024 aluminum price forecast from $2,400 per tonne to $2,450 per tonne, reflecting these changing expectations. However, the firm does not expect prices to reach the peak levels seen earlier this year, when supply shortages briefly pushed prices to a high of $2,768 per tonne.

Looking beyond 2024, BMI expects aluminum prices to remain elevated due to sustained demand driven by the accelerating shift towards a green economy. As aluminum is classified as a critical mineral by the US, EU, and Canada, concerns over supply are growing, which is likely to spur growth initiatives as major economies implement measures to boost aluminum production.

BMI forecasts that global aluminum consumption will grow from 70.5 million tonnes in 2024 to 88.2 million tonnes by 2033, with an average annual output growth rate of 2.5% during this period.